Can anyone predict the price of gold? It’s 'wishful thinking', says one gold mining consultant
(Kitco News) - Trying to accurately pinpoint where gold prices are heading could be as impossible as trying to predict the future, especially in light of all the volatility the market has seen this summer, according to one gold mining consultant.
“Essentially, what appears to be a reasoned forecast from a reputable source is often little more than a guess, or perhaps wishful thinking,” Surbiton Associates director Sandra Close said at the 2019 Diggers and Dealers mining conference, which took place in Australia’s ‘gold capital’ Kalgoorlie earlier this August.
“Forecasting the price of anything, including gold, amounts to predicting the future. No one can actually predict the future … that is why I never predict the gold price,” Close added.
People haven’t stopped trying, and Close notes that price forecasts have become very popular during this summer rally. But how accurate can those forecasts be considering daily volatility of around $20 for gold?
“If you really could predict the future, including the gold price, why would you work for an employer? Indeed, you could simply work for yourself and make endless amounts of money,” she said.
The older investors are more aware of the traps in forecasting gold and will avoid them. “Many of the gold price forecasters are probably young. Those of us who have been around for a long time have seen far too many surprises to fall into the trap. I’ll leave forecasting to the brave but foolhardy,” Close noted.
Even the technical analysis falls short of providing a real picture of the future, she added. “Charting is excellent for telling you where prices have been, but it will not tell you where prices are going,” Close said.
Close concedes that the mining industry needs to forecast gold prices and put it into its economic models: “You need to determine a reasonable gold price to use for the purposes of ore reserve calculations, feasibility studies, budgets, capital expenditure considerations, mine planning and scheduling and so on,” Close said. “Of course, such a figure must be understood to be a best guess but inherently wrong.”